Conquering Failure Demand
Double the capacity of your organisation, for free.
Failure Demand is Unnecessary Work
Professor John Seddon defines Failure Demand as “demand caused by a failure to do something or to do something right for the customer”.
An example: call centre staff are often incentivised to minimise call time. This can encourage them to focus on completing calls versus truly understanding and resolving a customer’s issue. It incentivises passing customers on to other staff, leaving the issue unresolved for longer.
If the success of call centre staff is measured on minimising call time, then it is likely call volumes will increase. This not because more customers need help (value demand), but because the same customers are having to call back because their issue remains unresolved (failure demand) — needlessly consuming call centre capacity.
Wouldn’t a better measure of success be solving the customer’s problem right first time? Would this not incentivise and allow call centre staff to do the right thing, thereby reducing failure demand?
Also, what does this mean for software projects, where developers are often incentivised to deliver projects to a pre-determined deadline, versus delivering the ‘right’ outcomes?
Vanguard estimates Failure Demand constitutes ~50% of the total demand in most organisations. Removing failure demand can double the capacity of our organisation — for free.
Misunderstanding Failure Demand Only Increases It
Unfortunately this failure demand is often misunderstood by managers, and the common reaction is to add further call centre supervisors or processes. This only adds further complexity and cost, amplifying failure demand.
To be clear: this misdiagnosis is not the fault of managers, it is just a reflection that they are often distanced from reality due to the design and structure of the organisation.
A better solution lies in understanding customer demand, by tracing calls through to resolution (“Process Stapling”). How many times did the same caller need to call back for the same issue? Why? Is this a common theme? How can we help our call centre staff resolve this issue on first contact?
If managers are the ones with the authority to solve the cause of failure demand, they must be the ones who trace and understand the underlying cause. In the above example — we simply need to change the faulty method used to judge the success of individual call centre staff.
Better still: we should create room for staff at the coal face to engage in continuous improvement: identify, diagnose and design for the reduction of failure demand. This leads to fulfilled employees, happier customers and reduced costs.
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